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Gold Price Struggle Below the $1,700 Mark

Gold prices
Gold prices

Gold price recovers some of Friday’s sharp losses after the robust employment data from the USA. The U.S. unemployment rate in May dropped to 13.3% while the forecast was looking for an increase to 20%. The U.S. Nonfarm Payrolls rise by 2,5 million in May, beating the estimates of -8 million jobs loss.

Mixed Chinese trade data during the weekend and Japanese GDP data also show challenges to major economies. Japan’s GDP revised to -0.6% against the forecast of -0.5%. China’s trade surplus widened; however, a sharp drop in imports shows a weaker demand for commodities.

Better than expected economic data point to a V-Shaped recovery, and investors increase the demand for risky assets while dumping safe-haven assets such as gold and U.S. Dollar.

Positions in SPDR Gold Trust, the largest gold-backed ETF, dipped 0.4% or 4.09 tonnes to 1,128.11 tonnes on Friday.

Investors are now waiting for the Fed’s two-day policy meeting on Tuesday and Wednesday, though the possibility that the Fed will adopt negative rates after the surprise recovery in employment has diminished.

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Gold Price Support and Resistance  

Gold price is 0.67% higher at 1,692 as the precious metal attempts to return above the 50-day moving average that breached on Friday for the first time since April 1. Gold finds stiff resistance at the 1,700 mark as the short term momentum is bearish below the 50-day moving average. For the long term, the outlook remains bullish but has to clear first the 1,700 mark. 

On the downside, the initial support for gold stands at 1,677 the daily low, while more buying interest might emerge at 1,670 the low from Friday’s trading session. In case the sellers continue the pressure, then the next support zone stands at 1,644 the 100-day moving average. 

On the other side, minor resistance stands at 1,697 the daily high. If the gold breaks above 1,697, then the next obstacle would be met at 1,7 the 50-day moving average. Next supply zone would emerge at 1,716 the high from June 5.